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Lexmark warns of laser shortfall for rest of 2010

Microscope contributor

Lexmark has warned that the laser shortages that have been a feature of the first half of the year are likely to persist for the next six months.

The Kentucky-based printer specialist filed a 14% rise in second quarter revenues to $1.033bn and profits of $85.1m compared to $17m a year ago. Hardware and supplies sales went up 26% and 10% respectively.

Paul Curlander, Lexmark CEO, said the results were fuelled by a focus on higher margin workgroup lasers and business inkjets, a consolidation of manufacturing facilities, a redundancy programme and increased use of shared service centres.

"We fundamentally have improved the business, and we've taken the cost structure down," he said, "These are fundamental things as a result of focusing on the high-end units, workgroup lasers and business inkjets."

However, the results could have been even better had Lexmark not been bitten by the industry wide shortage of components that has suckered others, including HP.

The Printing Solutions and Services division grew 20% to $752m with operating profits up 92% to $168m, driven by 7% growth in laser units and 30% in workgroup and MFP lasers.

"In the second quarter of 2010, our laser hardware sales continued to be supply constrained primarily due to the stronger than expected demand in component shortages in the market," said Curlander

He said the issue primarily impacted low-end lasers but it had also affected workgroup lasers and business inkjets and while it had ramped production, our supply chain team has to go out there and every day chase components

"We expect to continue to be constrained through the third quarter and into the fourth," he conceded.

Imaging Solutions Division (ISD) revenues were down 2% to $275m, excluding restructuring charges operating profits were up 7% to $34m.

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